13 Juni 2014

[130614.EN.SEA] Maersk Calls For More Investment in Indonesia's Infrastructure

DENMARK's Maersk Line has its eye on the Indonesia's
container shipping market, but also said infrastructure development is much
needed and the key to future growth.

Economic growth in the US and Europe has improved the
outlook for container traffic worldwide. Inventories in Europe are depleting
fast, but demand for imports of manufactured goods are expected to rise, it
said.

"People in Europe have started to buy more goods and
that is best indicator of growth. This has come as a pleasant surprise,
especially for the retail industry," said Maersk's Indonesia chief Jakob
Friis Sorensen.

Mr Sorensen added that Maersk Line has seen six per cent
export volume growth compared to last year, including palm oil, footwear,
garments, paper and textiles.

"Exports to our main markets of United States and
West Africa grew at 20 per cent and 12 per cent for Europe," he said.

But while exports of manufactures are expected to rise,
many fear a fall in imports of capital goods. A weaker rupiah and
infrastructure bottlenecks are the main reasons for the expected decline.

Domestic businesses have also put expansion plans on hold
as they wait for the outcome of July 9 direct presidential elections.

Mr Sorensen noted that imports of waste commodity, wood
pulp, foodstuffs and autoparts have declined 15 per cent year on year; and he
called for foreign investment, particularly in infrastructure development.

Plans are underway to build a new integrated port and
industrial estate in Surabaya as well as a new container port in Jakarta to
help ease the congestion at Tanjung Priok, the country's main port.

"This needs to be supported by better inter-coastal
connectivity so Jakarta can act as a main transshipment port and offer more
competitive costs. With better infrastructure you will see more
investments," he said.

Maersk Line offers a direct service from Bitung port in
North Sulawesi to Tanjung Pelepas in Johore, Malaysia that reduces the transit
time to Europe and the US by five to seven days.